\u00a0ICSI Syllabus For Executive Group1<\/p>\n
Company Accounts Cost And Management Accounting<\/p>\n
June 2010<\/p>\n
Time allowed : 3 hours Maximum marks : 100<\/strong> (iii) As per section 387 of the Companies Act, 1956, total remuneration to manager (b) Following are balance sheets of H Ltd. and S Ltd. as at 31st March, 2009 : (Rs. \u2019000) (ii) Depreciation as provided upto 30th September, 2009 is as follows : The expert valuer valued the land and buildings at Rs.4,80,000, goodwill at Rs.3,20,000 P A R T \u2014 B<\/strong><\/em><\/p>\n (Answer Question No.5 which is compulsory (iv) A profit centre whose performance is measured by its return on investment (c) Re-write the following sentences after filling-in the blank spaces with appropriate (b) Two manufacturing companies which have the following operating details decided A work order has been executed in the year 2008 and the expenses incurred \u00a0ICSI Syllabus For Executive Group1 Company Accounts Cost And Management Accounting June 2010 Time allowed : 3 hours Maximum marks : 100 Total number of questions : 8 Total number of printed pages : 11 NOTE : All working notes should be shown distinctly. P A R T \u2014 A (Answer Question No.1 which is … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":""},"categories":[2873],"tags":[],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/19230"}],"collection":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/comments?post=19230"}],"version-history":[{"count":1,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/19230\/revisions"}],"predecessor-version":[{"id":115913,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/19230\/revisions\/115913"}],"wp:attachment":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/media?parent=19230"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/categories?post=19230"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/tags?post=19230"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nTotal number of questions : 8 Total number of printed pages : 11<\/strong>
\nNOTE : All working notes should be shown distinctly.<\/strong>
\nP A R T \u2014 A<\/strong>
\n(Answer Question No.1 which is compulsory
\nand any two of the rest from this part.)
\n1. (a) State, with reasons in brief, whether the following statements are correct or incorrect:
\n(i) Accounting policies vary from enterprise to enterprise.
\n(ii) In the absence of declaration of dividend, there is no need to provide for
\ndepreciation in the accounts of companies.
\n(iii) Securities premium money can be distributed as dividend.
\n(iv) For calculating minority interest, there is a need to distinguish between capital
\nand revenue profits of the subsidiary.
\n(v) While preparing the consolidated balance sheet, a contingent liability in respect
\nof a transaction between the holding and the subsidiary companies is disappeared
\nfrom the foot note.
\n(2 marks each)
\n(b) Choose the most appropriate answer from the given options in respect of the
\nfollowing :
\n(i) Indian accounting standards are formulated under the authority of the \u2014
\n(a) Council of the Institute of Chartered Accountants of India
\n(b) National Advisory Committee on Accounting Standards
\n(c) International Accounting Standard Board
\n(d) Accounting Standard Board.
\n(ii) As per section 79 of the Companies Act, 1956 from the date of receiving the
\nsanction of the Central Government, a company must issue shares at discount
\nwithin a period of \u2014
\n(a) One month
\n(b) Two months
\n(c) Three months
\n(d) Six months.
\nCompany Accounts, Cost & Management Accounting<\/em><\/p>\n
\nshould not exceed the rate of net profit of the company except with approval
\nof the Central Government \u2014
\n(a) 5%
\n(b) 2%
\n(c) 11%
\n(d) 10%.
\n(iv) Profit on cancellation of own debentures should be transferred to \u2014
\n(a) Profit and loss account
\n(b) Profit and loss appropriation account
\n(c) Capital reserve account
\n(d) Reserve capital account.
\n(v) Profit prior to incorporation is transferred to \u2014
\n(a) General reserve
\n(b) Capital reserve
\n(c) Goodwill account
\n(d) Profit and loss account.
\n(1 mark each)
\n(c) Re-write the following sentences after filling-in the blank spaces with appropriate
\nword(s)\/figure(s) :
\n(i) Goodwill is ____________ asset.
\n(ii) Preliminary expenses being of capital nature may be written-off against
\n___________.
\n(iii) Collateral security implies ___________ security given for a loan.
\n(iv) Interim dividend is a dividend declared at any time between the ________
\nwhere the final dividend is declared.
\n(v) Stock reserve for unrealised profit in respect of inter-company transactions
\nshould be created by debiting __________ and crediting __________ while preparing
\nconsolidated profit and loss account.
\n(1 mark each)
\n2. (a) Write short notes on any two of the following :
\n(i) Non-acceptability of International Accounting Standards
\n(ii) Capitalisation of profits and reserves
\n(iii) Phases of generation of intangible assets.
\n(3 marks each)<\/p>\n
\nLiabilities H Ltd. S Ltd
\n(Rs.). (Rs.)
\nShare capital (Shares of Rs.100 each) 5,00,000 2,00,000
\nGeneral reserve as on 1st April, 2008 1,00,000 60,000
\nProfit and loss account 1,40,000 90,000
\nBills payable \u2013\u2013 40,000
\nCreditors 80,000 50,000
\n8,20,000 4,40,000
\nAssets
\nGoodwill 40,000 30,000
\nOther fixed assets 3,60,000 2,20,000
\n1,500 Shares in S Ltd. at cost 2,40,000 \u2013\u2013
\nStock 1,00,000 90,000
\nDebtors 20,000 75,000
\nCash at bank 60,000 25,000
\n8,20,000 4,40,000
\nThe profit and loss account of S Ltd. showed a balance of Rs.50,000 on 1st April,
\n2008. A dividend of 15% was paid on 15th October, 2008 for the year 2007-08. The
\ndividend was credited by H Ltd. to its profit and loss account. H Ltd. acquired
\nshares on 1st October, 2008. The bills payable of S Ltd. were all issued in favour
\nof H Ltd. and the same were got discounted by H Ltd. Included in the creditors
\nof S Ltd. are Rs.20,000 for goods supplied by H Ltd. The stock of S Ltd. includes
\ngoods to the value of Rs.8,000 which were supplied by H Ltd. at a profit of 33.33%
\non cost. Prepare consolidated balance sheet of H Ltd. and S Ltd. as on 31st March,
\n2009.
\n(9 marks)
\n3. The following balances have been extracted from the books of Pioneer Traders Ltd. as
\non 30th September, 2009 :
\n(Rs. \u2019000)
\nDr. Cr.
\nShare capital (Authorised and issued) :
\nEquity (15,00,000 Shares of Rs.100 each) \u2013\u2013 1,50,000
\n8% Redeemable preference (40,000 shares) \u2013\u2013 4,000
\nSecurities premium \u2013\u2013 2,500
\nPreference share redemption 4,800 \u2013\u2013<\/p>\n
\nDr. Cr.
\nGeneral reserve \u2013\u2013 10,000
\nLand (cost) 30,000 \u2013\u2013
\nBuildings (cost less depreciation) 70,000 \u2013\u2013
\nFurniture (cost less depreciation) 2,000 \u2013\u2013
\nMotor vehicle (cost less depreciation) 3,500 \u2013\u2013
\nTrading account \u2013 gross profit \u2013\u2013 90,000
\nEstablishment charges 25,000 \u2013\u2013
\nRate, taxes and insurance 1,200 \u2013\u2013
\nCommission 600 \u2013\u2013
\nDiscount received \u2013\u2013 500
\nInterest on investments \u2013\u2013 800
\nDepreciation 6,000 \u2013\u2013
\nSundry office expenses 6,000 \u2013\u2013
\nPayment to auditors 400 \u2013\u2013
\nSundry debtors and creditors 10,660 2,560
\nProfit and loss account (as on 30.9.2008) \u2013\u2013 1,000
\nUnpaid dividend \u2013\u2013 200
\nCash in hand 1,200 \u2013\u2013
\nCash at bank in current account 19,500 \u2013\u2013
\nSecurity deposit 1,000 \u2013\u2013
\nOutstanding expenses \u2013\u2013 600
\nInvestments in G.P. Notes 20,000 \u2013\u2013
\nStock in trade (at or below cost) 35,300 \u2013\u2013
\nProvision for taxation (year ended 30.9.2008) \u2013\u2013 7,000
\nIncome-tax paid under dispute (year ended 30.9.2008) 10,000 \u2013\u2013
\nAdvance payment of income-tax 22,000 \u2013\u2013
\n2,69,160 2,69,160
\nThe following further details are available :
\n(i) The preference shares were redeemed on 1st October, 2008 at a premium of 20%
\nbut no entries were passed for giving effect thereto, except payment standing to
\nthe debit of preference share redemption account.<\/p>\n
\n(a) Building \u2013 Rs.2,10,00,000.
\n(b) Furniture \u2013 Rs.20,00,000.
\n(c) Motor vehicles \u2013 Rs.60,00,000.
\n(iii) Establishment charges include Rs.18,00,000 paid to managing director as
\nremuneration in terms of agreement which provides for a remuneration of 5% of
\nannual net profits.
\n(iv) Payment to auditors includes Rs.1,00,000 for taxation work in addition to audit
\nfees.
\n(v) Market value of investments on 30th September, 2009 is Rs.1,80,00,000.
\n(vi) Sundry debtors include Rs.40,00,000 due for a period exceeding six months.
\n(vii) All receivables and deposits are considered good for realisation.
\n(viii) Income-tax demand for the year ended 30th September, 2008 Rs.1,00,00,000 has
\nnot been provided for against which appeal is pending.
\n(ix) Income-tax is to be provided @ 34%. Also provide for tax on divisible profit @ 16%.
\n(x) Directors recommended payment of dividend on equity shares at the rate of 12%.
\n(xi) Ignore previous year\u2019s figures.
\nYou are required to prepare the profit and loss account for the year ended 30th September,
\n2009 and a balance sheet as at that date.
\n(15 marks)
\n4. (a) Balance sheet of Diamond Ltd. as at 30th June, 2009 is given below :
\nLiabilities Rs.
\nShare capital : 40,000 Shares of Rs.10 each 4,00,000
\nGeneral reserve 80,000
\nProfit and loss account 64,000
\nSundry creditors 2,56,000
\nIncome-tax reserve 1,20,000
\n9,20,000
\nAssets
\nLand and buildings 2,20,000
\nPlant and machinery 2,60,000
\nPatents and trade marks 40,000
\nPreliminary expenses 24,000
\nStock 96,000
\nDebtors 1,76,000
\nBank balance 1,04,000<\/p>\n
\nand plant and machinery at Rs.2,40,000. Out of the total debtors, it is found that
\ndebtors of Rs.16,000 are bad. The profits of the company have been as follows :
\n31st March, 2007 : Rs.1,84,000
\n31st March, 2008 : Rs.1,76,000
\n31st March, 2009 : Rs.1,92,000
\nThe company follows the practice of transferring 25% of profits to general reserve.
\nSimilar type of companies earn at 10% of the value of their shares. Plant and machinery,
\nand land and buildings have been depreciated at 15% and 10% respectively. Ascertain
\nthe value of shares of the company by using \u2013\u2013
\n(i) Intrinsic value method;
\n(ii) Yield value method; and
\n(iii) Fair value method.
\n(6 marks)
\n(b) Rax Ltd. invited applications from public for 1,00,000 equity shares of Rs.10 each
\nat a premium of Rs.5 per share. The entire issue is underwritten by the underwriters
\nA, B, C, and D to the extent of 30%, 30%, 20%, and 20% respectively with the
\nprovision of firm underwriting of 3,000, 2,000, 1,000 and 1,000 shares respectively.
\nUnderwriters are entitled to maximum commission as per law. The company has
\nreceived applications for 70,000 shares from public out of which applications for
\n19,000, 10,000, 21,000 and 8,000 shares were marked in favour of A, B, C and D
\nrespectively. Calculate the liability of each underwriter treating firm underwriting
\non par with marked applications. Also ascertain the underwriting commission
\n@ 2.5% payable to each underwriter.
\n(6 marks)
\n(c) \u201cBuy-back may be misused by the corporate entities at the cost of innocent investors.\u201d
\nGive your comments.
\n(3 marks)<\/p>\n
\nand any two of the rest from this part.)
\n5. (a) State, with reasons in brief, whether the following statements are correct or incorrect:
\n(i) Under Flux Method, labour turnover is calculated by number of workers left
\ndivided by average number of workers.
\n(ii) In cost plus contracts, the contractor runs a risk of incurring a loss.
\n(iii) There is no need to record attendance of piece rate workers since attendance
\nis not relevant for ascertaining the amount of wages to be paid.<\/em><\/p>\n
\n(ROI) is known as investment centre.
\n(v) Contribution is not only the criterion for deciding profitability.
\n(2 marks each)
\n(b) Choose the most appropriate answer from the given options in respect of the
\nfollowing :
\n(i) The rate of change of labour force in an organisation during a specified period
\nis called \u2014
\n(a) Labour efficiency
\n(b) Labour turnover
\n(c) Labour productivity
\n(d) None of the above.
\n(ii) When a contract is not complete at the end of the year, profit on incomplete
\ncontract \u2014
\n(a) Is not considered
\n(b) Is considered for inclusion in the profit for the year
\n(c) Is considered for the inclusion of a part of the year
\n(d) None of the above.
\n(iii) When prices fluctuate widely, the method that will avoid the effect of fluctuations
\nis \u2014
\n(a) FIFO
\n(b) LIFO
\n(c) Simple average
\n(d) Weighted average.
\n(iv) Fixed costs remain fixed \u2014
\n(a) Over a short period
\n(b) Over a long period and within relevant range
\n(c) Over a short period and within a relevant range
\n(d) Over a long period.
\n(v) When the under or over absorbed overheads amount is significant, it should
\nbe disposed off by \u2014
\n(a) Transferring to costing profit and loss account
\n(b) Using a supplementary rate
\n(c) Carry over to next year
\n(d) None of the above.
\n(1 mark each)<\/p>\n
\nword(s)\/figure(s) :
\n(i) ______________ expenses are excluded from cost.
\n(ii) An account giving details of cost of production, cost of sales and profit made
\nduring a particular period is called _____________.
\n(iii) The process of apportionment of factory overheads among production and
\nservice department is called ____________ of factory overheads.
\n(iv) The time for which the employer pays remuneration to workers but obtains
\nno direct benefit is called ___________.
\n(v) A system that keeps a running and continuous record that tracks inventories
\nand cost of goods sold on day-to-day basis is called ________.
\n(1 mark each)
\n6. Summarised income statement and balance sheet of Progressive Ltd. are given
\nbelow :
\nIncome Statement for the Year ended 31st December, 2009
\n(Rs. \u2019000)
\nSales 1,600
\nLess: Cost of goods sold 1,310
\nGross margin 290
\nLess: Selling and administration expenses 40
\nNet operating income (EBIT) 250
\nLess: Interest 45
\nEarnings before tax 205
\nLess : Tax paid 82
\nNet income after tax 123
\nEarnings per share (EPS) is Rs. 3.075.
\nBalance Sheet as at 31st December, 2009
\nLiabilities (Rs. \u2019000)
\nPaid-up capital (40,000 shares of Rs. 10 each fully paid) 400
\nRetained earnings 120
\nDebentures 700
\nCreditors 180
\nBills payable 20
\nOther current liabilities 80
\n1,500
\n1\/2010\/CACMA P. T. O.
\n: 9 : 262
\nAssets (Rs. \u2019000)
\nNet fixed assets 800
\nInventory 400
\nDebtors 175
\nMarketable securities 75
\nCash 50
\n1,500
\nPrice per share is Rs.15.
\nIndustry\u2019s average ratios are :
\nCurrent ratio ………. 2.4
\nQuick ratio ………. 1.5
\nSales to inventory ………. 8.0
\nAverage collection period ………. 36 days
\nPrice per share\/book value of share ………. 1.6
\nDebts to assets ………. 40%
\nTimes interest earned ………. 6
\nProfit margin ………. 7%
\nPrice to earnings ratio ………. 15
\nReturn to total assets ………. 11%
\n(i) Progresssive Ltd. would like to borrow Rs.5,00,000 from a bank for less than a
\nyear. Evaluate the firm\u2019s current financial position by calculating ratios that you
\nfeel would be useful for the bank\u2019s evaluation.
\n(ii) What problem areas are suggested by your ratio analysis ? What are the possible
\nreasons for them ?
\n(iii) Do you think that the bank should give the loan ?
\n(iv) If Progressive Ltd.\u2019s inventory utilisation ratio (sales to inventory) and average
\ncollection period were reduced to industry average, what amount of funds would
\nbe generated ?
\n(15 marks)
\n7. (a) Write short notes on any two of the following :
\n(i) Superiority of zero base budgeting (ZBB) to traditional budgeting
\n(ii) Activity based costing
\n(iii) Cash, cash equivalents and cash flows.
\n(3 marks each)<\/p>\n
\nto merge :
\nCompany\u2013I Company\u2013II
\nCapacity utilisation (%) 90 60
\nSales (Rs. in lakhs) 540 300
\nVariable costs (Rs. in lakhs) 396 225
\nFixed costs (Rs. in lakhs) 80 50
\nAssuming that the proposal is implemented, calculate \u2013\u2013
\n(i) Break-even sales of the merged plant and the capacity utilisation at that
\nstage.
\n(ii) Profitability of the merged plant at 80% capacity utilisation.
\n(iii) Sales turnover of the merged plant to earn a profit of Rs.75 lakh.
\n(iv) When the merged plant is working at a capacity to earn a profit of Rs.75 lakh,
\nwhat percentage increase in selling price is required to sustain an increase
\nof 5% in fixed overheads ?
\n(9 marks)
\n8. (a) A company manufactures 5,000 units of a product per month. The cost of placing
\nan order is Rs.100. The purchase price of the raw material is Rs.10 per kg. The
\nre-order period is 4 to 8 weeks. The consumption of raw materials varies from
\n100 kgs. to 450 kgs. per week, the average consumption being 275 kgs. The
\ncarrying cost of inventory is 20% per annum. You are required to calculate \u2013\u2013
\n(i) Re-order quantity
\n(ii) Re-order level
\n(iii) Maximum level
\n(iv) Minimum level
\n(v) Average stock level.
\nAssume 52 weeks in a year.
\n(6 marks)
\n(b) Following information is available for a factory for the year 2008 :
\nRs.
\nDirect material ………. 3,00,000
\nDirect wages ………. 2,50,000
\nFactory overheads ………. 1,50,000
\nAdministrative overheads ………. 1,68,000
\nSelling overheads ………. 1,12,000
\nDistribution overheads ………. 70,000
\nProfit ………. 2,10,000<\/p>\n
\nwere \u2014 materials Rs.4,000; and wages Rs.2,500.
\nAssuming that in the year 2009 the rate of factory overheads has increased by
\n20%, distribution overheads have gone down by 10% and selling and administration
\noverheads have each gone up by 12.5%, at what price should the product be sold
\nso as to earn the same rate of profit on the selling price as in the year 2008 ?
\nFactory overheads are based on direct wages while other overheads are based on
\nfactory cost.
\n(9 marks)<\/p>\n","protected":false},"excerpt":{"rendered":"